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The Stock Market Just Hit An All-Time High. What Should I Do Now?

This is a question a few clients have asked us over the past week so we thought a detailed blog post would be helpful.  On Thursday August 11th the Dow, S&P 500 and the Nasdaq all made new all-time highs on the same day for the first time since December 31, 1999.  If you remember, the years that followed 1999 were not great for the market with the Nasdaq falling 50% in 2000 and the S&P 500 being negative in 2000, 2001 and 2002.  On the surface things don’t look great so we decided to dig a little bit deeper.

Since 1979 all three indices have hit new highs 148 times not including last week.  As the chart below shows, the majority of these took place while the market continued to move higher.  There was one that happened right before the 1987 crash and then one that happened at the end of 1999.  But the other 146 times the market continued to move higher.  The median return for the S&P 500 a year after those highs is 17.2%. The median one-year return at-any-time is 11.1%. So maybe things actually look great.  

So what will happen this time? We can honestly say that we have no idea.  Things are not the same as they were in 1987 or 1999.  In 1999, you were probably using dial up internet service to slowly download email.

Since we do not have any idea what will happen in the next month, quarter or year, one of our core values is “Invest in the market – do no attempt to predict it”.  We’ve outlined our investment principles that we believe work well over the long term here, they include the following key points:

  • Don’t try to outguess the market
  • Avoid market timing
  • Look beyond the headlines – Including headlines about all time market highs.
  • Practice smart diversification

In summary, don’t worry about short term market movements. The market may be higher or lower 12 months from now, but trying to guess the direction is not likely to work out well.  Focus on the things you can control like your long-term financial goals and saving as much money as you can.  Please email us or call 847-934-0010 with any questions or to get additional information.  


Past performance is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

The economic forecasts set forth in the presentation may not develop as predicted.

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security.

Stock investing involves risk including loss of principal.

The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index measures all Nasdaq domestic and non-U.S.-based common stocks listed on the Nasdaq stock market. The index is market-value weighted. This means that each company’s security affects the index in proportion to its market value. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the index. It is not possible to invest directly in an index.

The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and non-utility) goods and services. The Dow Jones industrial averages are maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors, and accurately represents the market sectors covered by the average. The Dow Jones averages are unique in that they are price weighted; therefore, their component weightings are affected only by changes in the stocks’ prices.

This research material has been prepared by LPL Financial LLC.